Odds of Recession Rise to 100 Percent Despite Biden’s Claims of a ‘Strong’ Economy: Bloomberg Economics

Odds of Recession Rise to 100 Percent Despite Biden’s Claims of a ‘Strong’ Economy: Bloomberg Economics
President Joe Biden speaks in Irvine, Calif., on Oct. 14, 2022. (John Fredricks/The Epoch Times)
Tom Ozimek

The chances that the U.S. economy will tip into recession at some point in the next 12 months have jumped to 100 percent, according to a model projection from Bloomberg Economics, with the grim forecast standing in sharp contrast to the Biden administration’s upbeat tone on the economy ahead of the midterms.

The updated recession odds, released on Oct. 17, are far higher than the prior Bloomberg Economics estimate of a 65 percent chance for a downturn.

It comes as members of the Biden administration have sought to reassure Americans that the economy is holding up solidly in the face of an aggressive monetary tightening cycle by the Fed, which many economists have blamed for being too late to the inflation fight.

JPMorgan Chase CEO Jamie Dimon recently warned that the United States is likely going to fall into a recession in the next six to nine months, adding that the Fed “waited too long and did too little” and is now “clearly catching up.”

President Joe Biden, meanwhile, has mostly stuck to rosy remarks about the economy. During a visit to Oregon on Saturday, he talked up the economy, saying it’s “strong as hell.”

Biden also downplayed the cost-of-living crunch bedevilling American households, claiming inflation is “worse off everywhere else than it is in the United States.” In September, U.S. inflation hit an annual 8.2 percent.

While a number of countries do indeed have higher rates of inflation—for instance Germany (10 percent), Spain (8.9 percent), and Mexico (8.7 percent)—quite a few have had lower price pressures. Canada (7 percent), Australia (6.1 percent), France (5.6 percent), and Switzerland (3.3 percent) are a few examples of advanced economies that in September reported lower rates of inflation.

Preparing for a Recession

For all of Biden’s optimistic remarks on the economy, the president did recently acknowledge that there is a chance that the United States would fall into a recession, though he added that it’s “very slight.”

Biden told CNN in an interview that aired on Oct. 11 that there’s a prospect for a “slight recession” where the U.S. economy will “move down slightly,” though the president added he doesn’t think a downturn will happen.

“Look, it’s possible. I don’t anticipate it,” Biden said.

Contrast that with a recent Conference Board survey of c-suite executives, which found that 98 percent of CEOs said they’re preparing for a recession in the next year to 18 months.

“CEO confidence sunk further to start Q4 and is at its lowest level since the Great Recession,” Dana Peterson, the Conference Board’s chief economist, said in a statement.

Most of the 136 CEOs taking part in the Conference Board survey said they think that a U.S. recession will be “brief and shallow.”

Economist Nouriel Roubini, dubbed Dr. Doom for his accurate prediction of the market crash during the 2008–09 financial crisis, said in a recent op-ed in TIME that the view that the recession will be mild and short-lived is “dangerously naive.”

“There is ample reason to believe the next recession will be marked by a severe stagflationary debt crisis,” Roubini wrote.

He argued that central bank policy normalization—hiking interest rates and pulling back on quantitive easing—will drive today’s highly indebted households, companies, banks, and governments into default and bankruptcy.

“The decade ahead may well be a Stagflationary Debt Crisis the likes of which we’ve never seen before,” Roubini warned.

Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
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